Wages and benefits for U.S. workers increased 1 percent in the period between October and December. The gains were sizable by historical standards but slower than the 1.2 percent jump in the previous three months, according to the Bureau of Labor Statistics's employment cost index.
Quarterly wage gains usually don't pass 1 percent but were consistently higher through 2022, as a tight labor market pushed many employers to sweeten the deal for workers. In the first quarter of 2022, worker compensation was up 1.4 percent, the biggest gains since 2001.
Those gains began to slow in the final months of the year, however. While private industry wages were still up 5.1 percent in December from a year earlier, the year-over-year rate for wage gains is down significantly from its 2022 peak of 11.39 percent.
Now the big question for economists is what this means for interest rates.
The Federal Reserve watches the index closely and in recent months, as goods inflation has fallen, has emphasized more the role of the labor market in driving prices. Whether this analysis is correct or not, slowing wage gains could encourage the Fed to pull back on rate hikes. Echoing the Fed, some economists have drawn a straight line between wage growth and inflation.
"Good news for prospects for sustained lower inflation from the latest Employment Cost Index (ECI) data," tweeted Jason Furman, former director of the National Economic Council of the United States. "But, the growth in Q4 was still higher than *any* quarter in the previous cycle. So still not likely to be compatible with 2% inflation and probably not even 3% inflation."
Other economists have pushed back against the conclusion that wages are fueling price gains.
“The key message here is that Chair Powell’s oft-expressed fear of the risk of a wage-price spiral is no longer realistic," said Pantheon Macroeconomics in a research brief.
The central bank's Federal Open Market Committee (FOMC) is currently meeting to discuss its next rate hike, and Powell is scheduled to announce the decision Wednesday afternoon.
The State Department had been in talks with Elon Musk’s Tesla company to buy armored electric vehicles, but the plans have been put on hold by the Trump administration after reports emerged about a potential $400 million purchase. A State Department spokesperson said the electric car company owned by Musk was the only one that expressed interest back in May 2024. The deal with Tesla was only in its planning phases but it was forecast to be the largest contract of the year. It shows how some of his wealth has come and was still expected to come from taxpayers.
At 100 years old, the Goodyear Blimp is an ageless star in the sky. The 246-foot-long airship will be in the background of the Daytona 500 — flying roughly 1,500 feet above Daytona International Speedway, actually — to celebrate its greatest anniversary tour. Even though remote camera technologies are improving regularly and changing the landscape of aerial footage, the blimp continues to carve out a niche. At Daytona, with the usual 40-car field racing around a 2½-mile superspeedway, views from the blimp aptly provide the scope of the event.
You'll just have to wait for interest rates (and prices) to go down. Plus, this deal's a steel, the big carmaker wedding is off, and bribery is back, baby!
It’s a chicken-and-egg problem: Restaurants are struggling with record-high U.S. egg prices, but their omelets, scrambles and huevos rancheros may be part of the problem. Breakfast is booming at U.S. eateries. First Watch, a restaurant chain that serves breakfast, brunch and lunch, nearly quadrupled its locations over the past decade to 570. Fast-food chains like Starbucks and Wendy's added more egg-filled breakfast items. In normal times, egg producers could meet the demand. But a bird flu outbreak that has forced them to slaughter their flocks is making supplies scarcer and pushing up prices. Some restaurants like Waffle House have added a surcharge to offset their costs.
William Falcon, CEO and Founder of Lightning AI, discusses the ongoing feud between Elon Musk and Sam Altman, and how everyday people can use AI in their lives.
U.S. tariffs on steel and aluminum “will not go unanswered,” European Union chief Ursula von der Leyen vowed on Tuesday, adding that they will trigger toug
The Trump administration has ordered the Consumer Financial Protection Bureau to stop nearly all its work, effectively shutting down the agency that was created to protect consumers after the 2008 financial crisis and subprime mortgage-lending scandal. Russell Vought is the newly installed director of the Office of Management and Budget. Vought directed the CFPB in a Saturday night email to stop work on proposed rules, to suspend the effective dates on any rules that were finalized but not yet effective, and to stop investigative work and not begin any new investigations. The agency has been a target of conservatives since President Barack Obama created it following the 2007-2008 financial crisis.
